Thread: Commercial or Residental ?

I am going into my 3rd year in business with about 80 residentail clients (few of them commercail) i just didnt have any idea on how to get my hands on commercail. Now i found out a little better and was wondering what would be better. Around me there is 2 big companys they both do res and comm. One comp does more then the other at commercial and vis versa. I was wondering what is a better direction to go into. It would be nice to have one crew do all ress and one do all com. I dont do though which market i should target more. Commercial goes for less money per area i can see. Let me know your guys opinion.

We have about 50% of our money comes from commericial. We like to start our day at 7:00am so we start on commericial. We have different kind of commericial so we normally can work about a half day then we peel off to go to residential. We don't have seperate crews for each. Commericial pays 12 months a year and that is nice. Some don't pay on time but we have never lost any money on commericial. We have a percentage of residential that don't pay on time either. We would like to have 100% commericial because it is rewarding to keep them nice and drive past them and admire the work. They are very demanding and usually we get jobs that TG and big guys have worked but can't respond quick enough on small jobs they want done.

Around here it's hard to make a profit at commercial work. But mid to high-end residential pays very well, and they are much more loyal.

As far as I can tell, the benefit to residential is that it pays better (per man hour), they are more loyal, and you only have to please one or two people. But the big disadvantage is that each account by itself doesn't account for a whole lot. So it takes longer to build your annual sales with residential. But that's also a benefit in that if you lose a few residentials, it's no real big deal. You still have 75 of them left. But you lose a few commercial jobs all at once and all of a sudden you're in a pickle.

The big advantage to commercial, as I see it, is that you grow your total annual revenues really quickly. You can go from being a $100,000 per year company to being a $500,000 per year company by just adding a hand full of large commercial accounts. But the disadvantages are that you can also lose big accounts very quickly, loyalty sucks, and the pay is less (per man hour).

Now other areas may differ. In some areas commercial is probably more profitable. But where I live, 90% of the commercial work isn't. And the 10% of commercial accounts that ARE very profitable don't go to guys like me.

There is a major difference in big commercial vs commercial. A big commercial job may take 2 crews with 6 Z's working for 4-8 hours. I cannnot and will not even bid that. That is a specialty that I am no where near servicing. Even the jobs that take 3 Z's 4 hours or more are not cost effective for me.
Now 1 or 2 acre commercial is no problem but anyone with a Z can do it and the pricing sucks for those so I don't really get those jobs.
Residential has its share of PITAS but it is also a greater profit potential from upsells on other services. My niche is the personal service. The customer can have as much or as little contact as they wish with me but they always know that it is me, the owner of the company, working at their house or business. For residential it works well for me. Thats what is neat about this site, we have a mix of all type of mowers here. Good Luck.

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I think where your at geographically, and in your career, plays a big role. I'm in a resort area lots of winter visitors, 2nd homes and they have lots of disposable income. I have 33 accounts and I grossed almost 400-K last year my smallest account is a commercial building one of my residential clients owns, every other week service, 2-something a month, I hate it. Everything else is residential. This service would not work in rural Indiana where I am from. I also could not sell this service as a young pup. But here, with my experience and education it works great.

Around here it's hard to make a profit at commercial work. But mid to high-end residential pays very well, and they are much more loyal.

As far as I can tell, the benefit to residential is that it pays better (per man hour), they are more loyal, and you only have to please one or two people. But the big disadvantage is that each account by itself doesn't account for a whole lot. So it takes longer to build your annual sales with residential. But that's also a benefit in that if you lose a few residentials, it's no real big deal. You still have 75 of them left. But you lose a few commercial jobs all at once and all of a sudden you're in a pickle.

The big advantage to commercial, as I see it, is that you grow your total annual revenues really quickly. You can go from being a $100,000 per year company to being a $500,000 per year company by just adding a hand full of large commercial accounts. But the disadvantages are that you can also lose big accounts very quickly, loyalty sucks, and the pay is less (per man hour).

Now other areas may differ. In some areas commercial is probably more profitable. But where I live, 90% of the commercial work isn't. And the 10% of commercial accounts that ARE very profitable don't go to guys like me.

I agree with Jim's statement 100%.....Per man hour the residential work pays better and they are more loyal.